Senate committee advances S.328 housing bill, extends VHFA tax-credit support and commissions legal review of common‑interest provisions

The Senate Economic Development, Housing & General Affairs committee on March 13 advanced draft 3.1 of S.328, a multi-part housing bill that updates municipal planning requirements, extends a tax‑credit program that supports down‑payment assistance, increases state credit‑facility authority, and asks legislative counsel for a written report on legal issues tied to common‑interest communities.

Cameron Wood of the Office of Legislative Council reviewed the new amendment and told members the draft narrows the municipal‑plan housing‑element changes by directly amending section 4382, subdivision 10. Under the amendment, a municipality's housing element must include an analysis of regulatory and physical constraints preventing development sufficient to meet targets, describe actions the municipality may take to accommodate projected housing needs, and document progress toward construction of identified units as plans are amended.

The committee also considered changes to state financial tools. Wood said the treasurer's authority for a credit facility would increase from 10% to 12.5% of the state's average cash on hand while earlier proposals for a separate 1% pilot credit facility and a special housing fund (seeded by interest) were removed from this version of the bill. David, a representative from the treasurer's office, told the committee that recent lending has been heavily housing‑focused; he estimated that roughly 80% of loans executed in the past two to three years have supported housing projects.

On housing finance, the committee reviewed language extending VHFA's authority to issue tax credits that fund down‑payment assistance. Chad Simmons of the Housing and Homelessness Alliance of Vermont said raising the annual credit cap from $250,000 to $350,000 and extending it through fiscal 2031 would help the VHFA preserve a $10,000 down‑payment assistance grant by replenishing the revolving account that relies on proceeds from tax‑credit sales and later repayments.

The panel agreed to remove expansive provisions aimed at altering common‑interest community (condominium/HOA) governance and instead requested legislative counsel produce a written report by November detailing the legal issues (including potential retroactivity, the use of common elements, and covenant/deed interactions) so members can decide on targeted policy changes later.

Committee members reviewed a suite of other amendments: clarifying that municipal bylaws cannot be used to effectively exclude mobile, modular or manufactured housing in districts allowing year‑round residential use (while preserving local design‑review and historic‑district rules), defining transit‑corridor hookup eligibility (properties within up to 2,000 feet of municipal water/sewer connections under specified prongs), and explicitly referencing developmental‑disability services in the service‑supported‑housing provisions. The committee also discussed appropriations and position requests in the bill, including two classified grants‑management specialists and other staffing authority for housing administration; members left placeholder language for several positions while noting budget tradeoffs and the need for further review in appropriations.

A contested element of the draft was a proposed zoning incentive: a 20% density bonus for multi‑unit residential projects greater than 45 units that use a project‑labor agreement. After extended fiscal and policy debate — with proponents urging engagement with the AFL‑CIO Housing Investment Trust and opponents questioning whether the bonus would 'pencil out' for developers — the committee agreed to remove the union‑labor density‑bonus section from draft 3.1 "out for now, but not forever," and to solicit financial modeling and expert testimony before considering reintroduction.

At the meeting's close, counsel and staff said they would prepare draft 3.1 incorporating the agreed edits. A motion to report S.328 draft 3.1 favorably was offered and the clerk conducted a roll call; the committee moved the amendment forward for further consideration with the noted changes and the union‑labor provision set aside for additional work.

What comes next: legislative counsel will deliver the revised draft, the committee will seek additional testimony and fiscal analysis on the union‑labor incentive, and the legal report on common‑interest communities is due in November, per the amendment's direction.